Economics, Gerald Giam, Main Stories, The Singapore Model, Writers - Wednesday, March 3, 2010 13:49 - 193 Comments

Low Thia Khiang: Low productivity not workers’ fault

By Gerald Giam

Workers’ Party chief Low Thia Khiang has slammed the PAP government for seemingly suggesting that Singaporean workers have only themselves to blame for their low incomes, because of their low productivity and skills. He said it was easy to blame our local workforce for low productivity when it was the Government which opened the floodgates to foreign workers.

Low was speaking Parliament on Tuesday in response to the Finance Minister’s Budget 2010 speech last week.

The Opposition leader pointed out that manual workers like cleaners and garbage collectors in developed economies are paid so much more than their counterparts in Singapore, attributing this to those countries’ more compassionate and effective policies to ensure that workers at the bottom of the economic ladder enjoy a decent and dignified life. Referring to the Government’s latest productivity drive, which is to grow productivity by 2 to 3 per cent each year over the next decade, Low wondered if low wage workers had to wait another 10 years for the wage increases which they had not seen in the last 10 years.

Low lamented that Singaporean workers are constantly told by the Government to “up-skill, re-skill, multi-skill, be cheaper, better, and faster”. He accused the Government of “squeezing every drop of effort and energy from our workers to achieve its desired GDP numbers”. He felt that the ‘growth at all costs’ strategy initiated since the late nineties resulted in the present state of our economy where low wage earners are growing dependent on state-funded handouts to subsist. He charged that for Budget 2010, the Government is using their same conventional wisdom to address the fundamental problems caused its policies of the last decade.

Abolish the foreign worker levy

Low called the Government to take a bold step to remove the foreign workers levy completely, and instead use the Dependency Ratio to control the growth of foreign workers in Singapore. (The Dependency Ratio sets how many foreign workers a company is allowed to hire for each Singaporean worker. The current ratio ranges from 1 Singaporean for every 7 foreign workers in the construction sector, to 1 is to 5 in the marine sector.) He reasoned that employers will save on the foreign worker levy they currently pay, and this could be used to benefit their local workers, including providing more training for them to improve their skills to become more productive.

Low also questioned whether the proposal to increase foreign worker levies was a revenue-enhancing exercise. He calculated that the Government collects about $1.6 billion in foreign worker levies each year.

Continuing education for older workers

In order to provide more adult continuing education programmes to cater to the needs of older Singaporeans, Low suggested starting a community college for citizens of all ages, especially older Singaporeans.  He said the college should have no or minimum entry requirements, offering courses that are totally modular. This would allow senior citizens to earn credits towards a degree or simply for self-enrichment purposes.

The PAP’s response

Responding to Low, PAP MP Josephine Teo criticised his suggestion to remove the foreign worker levy. She said: “To try and introduce an alternative system to a pricing mechanism is a very dangerous suggestion to make. It opens up a whole pandora box (sic) of the difficulties we have to overcome.”

Teo was dutifully following the PAP’s modus operandi of labelling any bold idea suggested by an Opposition MP as “dangerous”. She said that without the levy, foreign workers will be cheaper and more attractive to businesses, and some will find loopholes to get round the quotas, to get cheaper workers, “affecting jobs for Singaporeans”.

She did not explain what loopholes businesses would find to get around a higher dependency ratio, in a country which is renown for very strict enforcement of laws. She also seemed oblivious to the fact that it was the PAP government which opened Pandora’s box of troubles by allowing in so many unskilled foreign labourers over the past decade, and in the process depressing Singaporean workers’ wages and our nation’s productivity.

In a flash of presumptuousness, Teo declared: “I can speak on behalf of the union leaders that we totally and firmly reject Mr Low’s disastrous suggestion that we remove the foreign worker levy as it will harm our workers’ interest.”

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This article was first published on Gerald Giam’s Blog

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